Gold Fields’ acquisition of Canada-based Osisko Mining is now effective after the South African gold miner settled all conditions precedent to the transaction.
Gold Fields - which already had an interest in the Canadian gold producer - in August announced the acquisition of Osisko’s 50% stake in the Windfall project for over $1.3 billion. However, shares in Gold Fields traded 2.59% weaker in afternoon trade on the JSE at R303.82.
At the time of announcement, the transaction was subject to Canadian Competition Act approvals or no action confirmation, which was obtained last month.
Osisko shareholder approvals, obtained on 17 October 2024 and issuance of associated court orders customary for Canadian Plans of Arrangement, obtained on 22 October 2024, were also precedent conditions to the deal.
“Deposits of the scale and quality of Windfall with highly prospective exploration camps are rare, particularly in a world-class jurisdiction like Québec, Canada. This transaction therefore marks an important step in our journey to continue improving the quality of our portfolio,” said Mike Fraser, CEO of Gold Fields.
The transaction enables Gold Fields to consolidate its interests in Windfall to a 100% ownership. It will also have control of the extensive surrounding exploration district in Québec, Canada.
Gold Fields paid about $1.39bn, net of cash received as settlement for the transaction.
“This payment was made using cash on hand, undrawn debt facilities and liquidity facilities totalling $750m that were executed in October 2024. The Company remains in a solid financial position, maintaining its investment grade credit rating following settlement of the Transaction Consideration,” it said.
Gold Fields added that its financial position was expected to improve further, with strong cash flow growth expected for the balance of the year and into 2025, premised on production volumes increases at several of its operations.
After the complete acquisition of Windfall, Fraser said “key members of the Windfall team are remaining with the project,” with Gold Fields looking forward “to working with them and the Windfall business partners to develop this truly exceptional” asset.
Gold Fields is already pinning hopes of a rebound in the company’s production for this year in the second half to December after the company’s output fell 20% in the interim period to June, driving down earnings and dividends.
Softer gold production marked Gold Fields’ undoing in the half year under review, with output falling by 20% to 918 000 ounces. Fraser attributed this to “unplanned events, the delayed ramp-up at Salares Norte and the backfill issues at the South Deep” operations.
In the half year period to June, normalised earnings in Gold Fields were lower by 22% at $355 million or $0.40 per share compared to $454m or $0.51 per share a year earlier.
Gold Fields recorded adjusted free cash outflows of $58m, after accounting for costs and project capex, compared to an inflow of $140m in the previous contrasting period.
The company’s mines generated adjusted free cash flow from operations of $321m compared to $482m a year ago.